iLounge

iPod accessory makers hedging their bets?

By Jeremy Horwitz

Editor-in-Chief, iLoungeGoogle+
Published: Wednesday, January 25, 2006
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We’ve been seeing small clues for a while, but now it’s clear that iPod accessory makers are in the midst of developing a trend: non-iPod product diversification. Today’s announcement that JBL will be jointly developing accessories for Motorola’s music devices brings to a total of five the number of major companies that have publicly started to allocate resources to non-iPod audio devices in recent months, following electronics and case makers such as Altec Lansing (Palm, XM), Belkin (Creative, Dell, iRiver, Sony, XM), DLO (Creative, Samsung), and Speck Products (Motorola, Palm, RIM). These companies’ non-iPod products have ranged from unique XM Satellite Radio speaker systems, such as Belkin’s $99 boombox-like XM Audio System and Altec’s inMotion iMX2, to cases and generic electronic parts such as FM transmitters and chargers. Speck’s recent See-Thru case set for Motorola’s RAZR ($30, below) is the coolest RAZR case we’ve yet seen, and only one sign that these companies are ready to use the design techniques and skills they honed during iPod accessory development to help non-iPod devices, as well.

Why would companies bother with non-iPod products? From what we’ve heard in whispers here and there over the last twelve months, there are two reasons: costs and fear. A number of developers have been forced to raise prices because of Apple’s Made For iPod royalty program, which apparently has had considerably greater than expected impacts on both wholesale and retail costs for iPod accessories. Many companies are also citing pressure from market-dominating retailers, including (but not just) Best Buy, to raise their iPod accessory prices markedly above what the companies believe is appropriate. When sales of the products underperform their potential volumes, the retailers are content with their extra per-unit profits, but the developers still fall short on volume, and thus lose out on both market penetration and growth of their brand names. So the developers are looking to release non-iPod accessories they can sell at more reasonable prices, without the pressures of royalties and retailer pressure.

Fear is a mostly separate issue. Many accessory makers were shocked by the September 2005 release of iPod nano, lacking enough lead time to cancel or reduce shipments of products they’d designed for the iPod mini. The subsequent October release of the fifth-generation iPod didn’t help matters, throwing literally everyone into confusion over which prior accessories were and were not compatible. Many companies had to ditch, retool, or restart entirely on iPod accessories they’d been developing for months, and they’re not so sure that this won’t happen again - or that Apple isn’t planning to release its own competing products, further undercutting their development work. In response, many companies are looking for new partners who are willing to forecast and guarantee availability of their future products, making season-to-season sales more predictable, if not quite as lucrative.

From where we stand, there are many ways to read these developments - ‘natural,’ ‘great,’ and ‘disappointing,’ to name just a few - but as iPod fans, we’re inclined to go more with ‘disappointing’ because of what we saw, or rather what we failed to see, at both Macworld and CES this month. JBL’s $299 On Time - winner of one of our Best of Show awards - was the only truly interesting iPod speaker system we saw at both shows put together, which was striking because there were no fewer than 50 new iPod speakers on display across many new and old vendors. It was also about $100 more expensive than most people expected, a shock given the company’s history of developing high-value audio components, and one the company’s representatives would not elaborate on when asked. Is this the future of iPod accessories - good stuff that’s too expensive for average people, and junk at the bottom of the pond? We certainly hope not, but we’re becoming increasingly concerned.